June 25 (Bloomberg) -- CIMB Group Holdings Bhd., Southeast
Asia’s top-ranked investment bank over the past three years, is
taking aim at a bigger market following its acquisition of some
of Royal Bank of Scotland Group Plc’s operations in Asia.

The Malaysian company can now compete with rivals including
Goldman Sachs Group Inc. and JPMorgan Chase & Co. for Asia-Pacific deals, Chief Executive Officer Nazir Razak said in an
interview in Kuala Lumpur. CIMB agreed in April to buy most of
Edinburgh-based RBS’s investment banking and cash equities
businesses in the region for $142 million.

The acquisition, which initially seemed to be an
“audacious” idea, will complete the bank’s operations and help
CIMB boost market capitalization to more than 100 billion
ringgit ($31 billion) by 2015, Nazir said. That’s about 75
percent more than its current value. The Kuala Lumpur-based
lender also targets becoming one of the top three Southeast
Asian banks by assets and return on equity.

“CIMB today is complete for the endgame in 2015,” Nazir,
45, said on June 20. “Building up the investment banking
platform in Asia Pacific ex-Asean in small pieces was painful
and quite expensive because you have to hire people gradually
and people cannot see how serious you really are. With this
position, we instantly get scale.”

Acquisition Spree

Their agreement allows CIMB, Malaysia’s second-largest bank
by assets and market value, to absorb or buy RBS’s operations in
markets including Australia, Hong Kong, Indonesia and Thailand,
according to a presentation posted on its website. Matthew
Kirkby, head of global banking at RBS for Asia-Pacific, is among
331 employees who will transfer.

“We find our relationship with CIMB a very good match,”
Nicholas Rowe, head of investment banking at RBS in Australia,
said in an interview in Kuala Lumpur on June 14. “With the
Asian century facing us, the actual growth in the markets, M&A
business and capital flows is more going to be focused on the
eastern side of the chart with Asia, particularly Asean.”

Nazir, the son of former Malaysian Prime Minister Abdul
Razak Hussein and a younger brother of current Prime Minister
Najib Razak, joined the corporate advisory division of CIMB
Investment Bank Bhd. in 1989. After the firm’s securities and
commercial lending operations were combined, he became CEO of
the group in November 2006.

Since then, CIMB has spent about $2.32 billion on 19
acquisitions, including the purchase announced last month of a
60 percent stake in the Philippines’s Bank of Commerce for 12.2
billion pesos ($287 million).

‘Strong Leadership’

“We’re excited about the group’s recent acquisitions,”
said Cheah King Yoong, an analyst at Alliance Financial Group
Bhd. in Kuala Lumpur. “CIMB has transformed from a niche
domestic bank to a reputable universal bank in the region under
Nazir’s strong leadership and his competent management team.”

The Malaysian lender, set up in 1965 by the government as
Bank Bumiputra Malaysia Bhd., is ranked first in takeover
advisory and in managing equity and bonds sales in Southeast
Asia over the three years to June 21, according to data compiled
by Bloomberg.

In underwriting capital-market deals for the region, CIMB
beat out DBS Group Holdings Ltd. and HSBC Holdings Plc, while
RBS trailed at No. 35, the data show. For takeovers, it trumped
Morgan Stanley, Credit Suisse Group AG and Goldman Sachs, with
RBS lagging behind at No. 19.

Asian Ranking

Still, as an adviser on mergers and acquisitions for
companies across the Asia-Pacific region over the same period,
CIMB was No. 35, while Goldman Sachs, Morgan Stanley and
JPMorgan, all based in New York, took the top three spots. RBS
ranked No. 17, the data show.

Asian lenders will gain more prominence as global economic
power shifts to the region, and local banks should seize the
opportunity in capturing deal flow, Nazir said.

“This is not going to be an Asian century unless Asians
are willing to step up,” he said last week. “In many ways,
this is how we are putting our money where our mouth is.”

The chief executive is already tapping his firm’s regional
network to win mandates.

Regional Mandates

CIMB helped manage last month’s $141 million initial public
offering of Thai AirAsia Co.’s parent, Asia Aviation Pcl, in
Bangkok. It was also among the managers for Genting Singapore
Plc’s S$1.8 billion ($1.4 billion) perpetual bond sale this year
and assisted Saudi Arabia-based Islamic Development Bank in
selling $800 million of Shariah-compliant debt last week.

The lender is benefiting from Malaysian companies that are
pushing ahead with IPOs even as markets worldwide are roiled by
concern that global growth will slow amid Europe’s protracted
debt crisis.

The acquisition of RBS’s assets and some new hires will
give CIMB, Southeast Asia’s fifth-largest bank by assets, an
additional 130 employees in Hong Kong, as well as 125 in
Australia, 60 in India, and 20 in New York and London. About 26
employees would be added in China, Singapore and Taipei.

RBS’s operations in the Asia-Pacific region are also
complementary to CIMB’s own, the chief executive said last week.
The turmoil in global equity markets and beleaguered valuations
for investment banking operations globally made the timing for
the purchase “favorable,” he added.

“When I first saw it, I thought it was outrageous for
us,” Nazir said. “Audacious as it seems at first glance, when
you think about the build out of our platform, it was an
opportunity to actually complete what we were trying to do in
China, India, even Australia, Taiwan and Korea.”